Loading...
HomeMy WebLinkAboutPR 20910: AUTHORIZATION REVISIONS TO THE CITY OF PORT ARTHUR'S HOUSING ASSISTANCE PROGRAM GUIDELINES FOR HOMEBUYER ACTIVITIES INTEROFFICE MEMORANDUM HOUSING AND NEIGHBORHOOD REVITALIZATON TO: REBECCA UNDERHILL, INTERIM CITY MANAGER FROM: BEVERLY A. FREEMAN, HOUSING&NEIGHBORHOOD REVITALIZATION DATE: JUNE 21, 2019 RE: P.R. 20910 —AUTHORIZATION REVISIONS TO THE CITY OF PORT ARTHUR'S HOUSING ASSISTANCE PROGRAM GUIDELINES FOR HOMEBUYER ACTIVITIES. NATURE OF THE REQUEST: It is recommended the City Council adopt Proposed Resolution 20910 authorizing revisions to the City of Port Arthur's Housing Assistance Program Guidelines for homebuyer activities. STAFF ANALYSIS/CONSIDERATIONS: Community Development Block Grant(CDBG) Program funds and HOME Investment Partnership (HOME)Program funds are allocated annually to the City by the U.S. Department of Housing and Urban Development to provide a Homebuyer Assistance Program in accordance with 24 Code of Federal Regulations Part 570 and Part 92. The City Council by authorization of Resolution Number 19-226 has obligated the City to provide a Homebuyers Assistance Program to assist qualified homebuyers of the city with the purchase of a new construction or existing home and with down payment and closing costs associated with the purchase of a home. The following summarizes revisions in the Housing Assistance New Construction & Existing Home Purchase Program Guidelines as recommended by the U.S. Department of Housing& Urban Development as recommended by the U.S. Department of Housing& Urban Development: REVISIONS TO THE HOUSING ASSISTANCE NEW CONSTRUCTION & EXISTING HOME PURCHASE ACTIVITIES • Page 3 - #1. Added a narrative to provide clarification of the following: o The income calculation will be determined by the Housing Department as required by Federal Regulation. Income will be verified by the Department by reviewing and documenting tax returns, copies of wage receipts (paycheck stubs), subsidy and/or benefit checks, bank statements and third party verification of employment, (using forms sent directly to employers). All documents expire 6 months after income certification date. • Page 4 - #7. Omitted requirement of IRS transcript; Included narrative to clarify complete and signed forms retrieved from the IRS will be accepted. • Page 4 - # 12. Removed requirements by the City for a credit report. • Page 5 - Omitted the following statements: o 1. A funding availability notice shall be published in the media to alert additional prospective applicants. o 3.Upon receipt of a completed application,qualified applicants will be added to the waiting list. o 5. When an applicant reaches the top of the list or is approved for a home loan, he/she may be required will be contacted and required to update all information on the application form,(federal regulations require applicants information be updated every 6 to 12months). Also omitted Education Counseling is required by a HUD Certified Housing Counseling Agency. o 6. Applicant(s) falsifying or providing misleading information will be immediately disqualified from participating in the programs. • Page 6—Direct Financial Assistance: o Increased down payment assistance from $10,500 to $12,500 o Omitted the following statement: • Applicant(s) falsifying or providing misleading information will be immediately disqualified from participating in the programs. • Page 7—Loan Application Process: o #1a. Omitted the following statement: • The signed earnest money contract, Homebuyers Certificate, required financial information for the past two(2)years and two(2)current three(3) months current check stubs shall be submitted to the Housing Administrator. • Page 8 -#3b: Omitted the following phrase: • If a property is sold or rented within the period of affordability,the balance of the HOME or CDBG subsidy funds provided is prorated payable in full to the City of Port Arthur. • Page 9 = Provided a statement on the requirements of the Environmental Clearance requirements. • Page 9 —Provided clarity on Land Acquisition that will be provided from the City's Land Bank. • Page 9 - Added the statement that Additional land may be acquired and cleared of debris, trees, sidewalks, etc. • Page 10—Omitted the following statement: o The cost of land and site preparation will be charged to the applicant(s). • Page 10—Provided clarity on the following: o Recommendations to fund an"Over Income Activity that is at the discretion of the City Manager or his/her designees as funds may be available. • Page 10—Omitted the following statements on Credit History and Credit Reports: o A residential mortgage credit report and credit history will be obtained and reviewed by a third party institution to determine applicant eligibility to qualify for a mortgage loan. o A residential mortgage credit report or an in file credit report from an independent credit reporting agency that meets the Program's or local lending institution's guidelines is required. The Housing Assistance Division and the lenders should develop a credit history for borrowers who normally do not use credit (establish nontraditional credit). Credit history may be developed by verifications from utility companies, current and previous landlords, and other sources of credit or services where the borrower was or is required to meet regular financial obligations. The Housing Division shall review the credit history and credit reports, however, derogatory ratings will not necessarily cause a negative response. • Page 11—Provided the following statement to give clarity on the Credit Reports and Credit History. • A residential mortgage credit report and credit history will be obtained and reviewed by a third party institution to determine applicant eligibility to qualify for a mortgage loan. • Page 11 —Included"Windstorm as part of the Insurance requirements. • Page 15 — Removed the "Housing Programs Administrator's" information; included the "Development Services Department"name. Updated the Assistant City Manager and City Manager's information. • Pages 18-23—Inclusion of Definitions. RECOMMENDATIONS: I recommend City Council adopt Proposed Resolution No. 20910 authorizing revisions to the City of Port Arthur's Housing Assistance Program Guidelines for homebuyer activities. BUDGETARY IMPACT: No effect P. R. 20910 June 21, 2019—Housing/BAF RESOLUTION NUMBER A RESOLUTION AUTHORIZING REVISIONS TO THE CITY'S HOUSING ASSISTANCE PROGRAM GUIDELINES FOR HOMEBUYER ACTIVITIES. WHEREAS, pursuant to the Housing and Urban Development Act of 1974 the Housing and Urban Development awards annual Community Development Block Grant and HOME funds to the City of Port Arthur for the primary benefit of low and moderate income persons/families in accordance with 24 Code of Federal Regulations Parts 570 and 92; and, WHEREAS, Community Development Block Grant(CDBG) Program funds and HOME Investment Partnership(HOME) Program funds are allocated annually to the City by the U. S. Department of Housing and Urban Development(HUD)to provide a Homebuyers Assistance Programs in accordance with 24 Code of Federal Regulations Part 570 and Part 92. The City Council by authorization of Resolution Number 19-226 has obligated the City to provide a Homebuyers Assistance Program to assist qualified homebuyers of the city with the purchase of a new construction or existing home and with down payment and closing costs associated with the purchase of a home; and, WHEREAS, it is now deemed necessary to revise the previous Housing Assistance Program Guidelines for homebuyer activities as recommended by HUD; and, WHEREAS,the revisions are attached hereto as Exhibit"A"; and, WHEREAS,the revised Housing Assistance New Construction& Existing Home Purchase Program Guidelines are attached hereto in substantially the same form as Exhibit"B". BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR: Section 1. THAT the facts and opinions in the preamble are true and correct. Section 2. THAT the City Manager is hereby authorized to implement the revised Housing Assistance Programs,New Construction and Existing Home Purchase Program Guidelines that are attached hereto in substantially the same form as Exhibit "A". Section 3. THAT a copy of the caption of this Resolution be spread upon the minutes of the City Council. READ, ADOPTED AND APPROVED this day of A.D.,2019 at a Regular Meeting of the City Council of the City of Port Arthur, Texas by the following vote: AYES: MAYOR COUNCILMEMBERS NOES: MAYOR ATTEST: SHERRI BELLARD, CITY SECRETARY APPROVED FOR FORM: 14 04 he �•lr -� c- VA ' (A TJ NO, CITY ATTO EY APPROVED FOR ADMINISTRATION: REBECCA UNDERHILL, INTERIM CITY MANAGER RON BURTON, ASSISTANT CITY MANAGER BEVERLY A. FREEMAN, HOUSING & NEIGHBORHOOD REVTALIZATION EXHIBIT "A" REVISIONS TO THE HOUSING ASSISTANCE NEW CONSTRUCTION & EXISTING HOME PURCHASE ACTIVITIES • Page 3 - #1. Added a narrative to provide clarification of the following: o The income calculation will be determined by the Housing Department as required by Federal Regulation. Income will be verified by the Department by reviewing and documenting tax returns, copies of wage receipts (paycheck stubs), subsidy and/or benefit checks,bank statements and third party verification of employment,(using forms sent directly to employers). All documents expire 6 months after income certification date. • Page 4-#7. Omitted requirement of IRS transcript; Included narrative to clarify complete and signed forms retrieved from the IRS will be accepted. • Page 4 -# 12. Removed requirements by the City for a credit report. • Page 5 - Omitted the following statements: o 1. A funding availability notice shall be published in the media to alert additional prospective applicants. o 3. Upon receipt of a completed application, qualified applicants will be added to the waiting list. o 5. When an applicant reaches the top of the list or is approved for a home loan, he/she may be required will be contacted and required to update all information on the application form,(federal regulations require applicants information be updated every 6 to 12months). Also omitted Education Counseling is required by a HUD Certified Housing Counseling Agency. o 6. Applicant(s) falsifying or providing misleading information will be immediately disqualified from participating in the programs. • Page 6—Direct Financial Assistance: o Increased down payment assistance from$10,500 to $12,500 o Omitted the following statement: • Applicant(s)falsifying or providing misleading information will be immediately disqualified from participating in the programs. • Page 7—Loan Application Process: o #1a. Omitted the following statement: • The signed earnest money contract, Homebuyers Certificate,required financial information for the past two (2) years and two (2) current three (3) months current check stubs shall be submitted to the Housing Administrator. • Page 8 -#3b: Omitted the following phrase: • If a property is sold or rented within the period of affordability, the balance of the HOME or CDBG subsidy funds provided is prerace payable in full to the City of Port Arthur. • Page 9 = Provided a statement on the requirements of the Environmental Clearance requirements. • Page 9—Provided clarity on Land Acquisition that will be provided from the City's Land Bank. • Page 9-Added the statement that Additional land may be acquired and cleared of debris,trees, sidewalks, etc. • Page 10—Omitted the following statement: o The cost of land and site preparation will be charged to the applicant(s). • Page 10—Provided clarity on the following: o Recommendations to fund an"Over Income Activity that is at the discretion of the City Manager or his/her designees as funds may be available. • Page 10—Omitted the following statements on Credit History and Credit Reports: o A residential mortgage credit report and credit history will be obtained and reviewed by a third party institution to determine applicant eligibility to qualify for a mortgage loan. o A residential mortgage credit report or an in file credit report from an independent credit reporting agency that meets the Program's or local lending institution's guidelines is required. The Housing Assistance Division and the lenders should develop a credit history for borrowers who normally do not use credit (establish nontraditional credit). Credit history may be developed by verifications from utility companies, current and previous landlords,and other sources of credit or services where the borrower was or is required to meet regular financial obligations. The Housing Division shall review the credit history and credit reports,however,derogatory ratings will not necessarily cause a negative response. • Page 11 — Provided the following statement to give clarity on the Credit Reports and Credit History. • A residential mortgage credit report and credit history will be obtained and reviewed by a third party institution to determine applicant eligibility to qualify for a mortgage loan. • Page 11 —Included "Windstorm as part of the Insurance requirements. • Page 15 — Removed the "Housing Programs Administrator's" information; included the "Development Services Department" name. Updated the Assistant City Manager and City Manager's information. • Pages 18-23—Inclusion of Definitions. EXHIBIT "B " Energy City of city 40/ c-� UTi 1'(1l 111 HOUSING AND NEIGHBORHOOD REVITALIZATION HOUSING ASSISTANCE PROGRAMS NEW CONSTRUCTION & EXISTING HOME PURCHASE PROGRAM GUIDELINES / _.----••---- / . / ' t I I ,\ \ , Ai iil ....il il ).-.. .iiiiii.. .. 7 #/ ................. 1 A REVISED JUNE 2019 P,R, 20910 EQUAL HOUSING OI.ORT UNITY Table of Contents PAGE# 3-4 Applicant Eligibility Requirements 5 Application Process 6 Loan Application Process 8 Pre-Existing Eligible Properties 8 Environmental Clearance Requirements 8 Property Inspections 9 Land Acquisition And Site Preparation 9 Minimum/Maximum HOME Program Subsidy Amounts 9 Loan Terms 9 Gifts 10 Credit Reports and Credit History 10 Closing Costs and Pre-settlement Costs 10 Mortgage Instruments 10 Title/Hazard/Windstorm/Flood Insurance 10 Appraisals 10 Surveys 10 Homebuyer Education 11 Borrower's Income 11 Civil Rights Act 12-13 Program Specific Requirements 2 EI REVISED JUNE 2019 EQUAL „S»,a,� P.R. 20910 OPPORTUNITY 14 Grievance Procedure 15 Refund Policy 16 Acknowledgement 17-22 Definitions 3 REVISED JUNE 2019 C,,,, ,,, P.R. 20910 AI HOUSIOPPORTUNITY CITY OF PORT ARTHUR HOUSING AND NEIGHBORHOOD REVITALIZATION HOUSING ASSISTANCE PROGRAMS NEW CONSTRUCTION & EXISTING HOME PURCHASE PROGRAM GUIDELINES PURPOSE The overall objective is the development of viable communities by providing affordable housing, promoting a suitable living environment and expanding economic opportunities, primarily for low income persons and families in the City of Port Arthur. In order to address the need for affordable housing, the City of Port Arthur established a New Construction & Existing Home Purchase Program that is administered through the Housing and Neighborhood Revitalization Department of the City of Port Arthur. The City of Port Arthur's New Construction & Existing Home Purchase Programs are designed to provide direct financial assistance primarily to low to moderate income persons. Through the utilization of Federal and local funds, families will be given the opportunity to own a home of their own. The funds are used to provide interim financing for construction and used to buy down mortgage interest rates, pay closing costs and principle reduction. Participants must qualify for mortgage financing through a lending institution, which utilizes standard underwriting procedures. APPLICANT ELIGIBILITY REQUIREMENTS To be eligible to receive homebuyer's assistance from the City of Port Arthur's New Construction & Existing Home Purchase Program, applicants must meet the following requirements: 1. Applicant(s) total projected annual gross household income must not exceed eighty percent (80%) of the current median income for the area, adjusted for family size, as established by the U.S. Department of Housing and Urban Development (HUD). The income calculation will be determined by the Housing Department as required by Federal Regulation. Income will be verified by the Department by reviewing and documenting tax returns, copies of wage receipts (paycheck stubs), subsidy and/or benefit checks, bank statements and third party verification of employment, (using forms sent directly to employers). All documents expire 6 months after income certification date. 2. Applicant(s) must not currently own a home. Exceptions: a. A single parent, defined as an individual who is legally separated or divorcing from a spouse and has one or more minor children for whom the individual has custody or joint custody, or who is pregnant at the time of application. b. An individual or family whose principal residence during the twelve month (12 month) period, prior to the purchase of a home using the City of Port Arthur's Housing Assistance Program funds, is not affixed to a permanent foundation, (i.e.: mobile home), in accordance with local or other applicable codes and regulations. 3 REVISED JUNE 2019 P,R. 20910 EQUAL HOVSIIIG OPPORTUNITY c. An individual or family whose residence is not in compliance with local building codes or other applicable codes, (i.e.: electrical wiring, plumbing, extensive roof damage, damaged foundations), and the unit cannot be brought into compliance for less than the cost of building a permanent structure. d. A individual or family who desire to relocate to this community from a different City, State or Country. 3. Applicant(s) must be a U.S. citizen or a permanent resident or possess a current work authorization visa. 4. Permanent residents and individuals with work authorization visa must provide a copy of both sides of their un-expired immigration documents from the Immigration and Naturalization Services. 5. Applicant(s) must certify that he/she/they will occupy the unit as his/her/their primary residence for the full term of the required period of affordability, as determined by the amount of assistance received. 6. Applicant(s) must be able to obtain financing from a private or public lending source. 7. Applicant(s) requesting assistance must provide prior two (2) years income tax forms as filed with the IRS, _ _ _ • - -). Completed and sign forms retrieved from the IRS will be accepted. 8. Applicant(s) may not receive cash back at closing. 9. Applicant's family size must be appropriate for the number of bedrooms in the available unit. All dependents must have verifiable supporting documentation, (i.e. birth certificate, social security card, legal documentation of adoption or guardianship, school records with matching address for children). Unborn children are included. 10. Applicant(s) must successfully complete a minimum of eight (8) hours in a homebuyer's counseling & training course by a HUD Certified Housing Counseling Agency. 11. Applicant(s) must provide proof of income; current and projected income will be used to evaluate applicants eligibility for assistance. 12. Applicant(s) must sign an authorization for release of information for verification of employment and income. and credit report 13. While Federal assistance (HOME or CDBG) cannot be provided to any applicant(s) with a projected gross annual income above 80 percent of the area median income. Applicant(s) with a projected gross annual income at 81 percent and above may be eligible to receive an interest free loan in the amount of $5,000 which may be used as subsidy funding for down payment and closing costs assistance as identified in Resolution 02-213; or, the funds may be utilized as a deferred grant to acquire land and perform site preparations for new construction activities. Funding is provided through utilization of the non federal funds. Funds are available at the discretion of the City Manager and or his/her designees. Applicant(s) meeting the criteria will be processed on a first come, first served basis, provided the applicant has provided ALL of the required documents. No commitment is made or implied until the City of Port Arthur's Housing & Neighborhood Revitalization Department has approved funding for each application. Due to the funding limitations, no applicant should assume any commitment even when applicant(s) must expend personal funds to meet application requirements. 4 REVISED JUNE 2019 P,R. 20910 COUAL HOUSING OPPORTUIIITY Application Process applicants. 2. Interested applicants will be given an application form, requirement of verifications and instructions for completion. The City's Housing & Neighborhood Revitalization Department will explain the program requirements in detail at the time the application is given to the applicants. 3. - . . . Applications are deemed complete only if all information is completed, the application is signed and dated. 4. Once a completed application is received by the Department, (or when the applicant(s) name come to the top of the waiting list), their program eligibility will be verified by the Department. Applicants will be required to complete a minimum of eight (8) hours in a Homebuyer's Education Course as approved by the City of Port Arthur. Housing Counseling ^gency. Upon successful completion of the course, the applicants shall be directed to apply for a full mortgage approval. Once qualified, the applicants will be encouraged to select a suitable and affordable existing house or select a suitable home design for new construction, as applicable, and submit an earnest money contract on the property; as designated by representative or seller of the the property; ($1,000.00 required for new construction (City of Port Arthur owned homes) or amount designated by representative or seller of the property and $500.00 required for existing home purchase, unless otherwise designated by the seller or representative of the property). 6. •• - •• •• - • t , - •- - - •• • • t e: • If the Department encounters material discrepancies and/ or misrepresentations, and/or there are income, asset, household composition, or other important questions that can't be resolved, the Department reserve the right to deny assistance to the household. In this case, the applicant may re-apply after 60 days have elapsed from the time of written denial. 7. The lender will then coordinate the required information with Housing Department to complete the file for closing. During this process, the applicant may be contacted by a Housing staff member for additional information. 8. Closing on the property will take place at selected title company. At closing, the applicant will receive a detailed explanation of the terms and conditions of the Lender. DIRECT FINANCIAL ASSISTANCE Eligible applicants earning 80 percent or less of the area median income may receive up to $30,000.00 in direct financial assistance for new construction. This assistance will be limited to applicants earning 80 percent of less of the area median income. This assistance shall not exceed the difference 5 REVISED JUNE 2019 (OVAL NOVSIN. P.R. 20910 OP FORT U NI T': between the maximum amount of a first mortgage from a private lender and the selling price of the home plus closing costs. When an existing house is purchased, eligible applicants, may receive up to $12,500.00 in direct financial assistance to be used for down payment and/or closing costs assistance. This assistance will be limited to applicants earning 80 percent of less of the area median income. This a«;sta will be Used to fill the gap between the ma •-• - . . _ - _ _ . - _ _ - _ . . - - - _ • - t;elling price of the home. This assistance shall not exceed the difference between the maximum amount of a first mortgage from a private lender and the selling price of the home plus closing costs. LOAN APPLICATION PROCESS 1. Approval Process for Assistance a-, Once your application packet is submitted to the Housing office, staff will determine if your household meet basic income and eligibility requirements. The City will rely on the information included in the homebuyer application and the backup documentation provided. Depending on the particular circumstances, the City may request additional information or documentation. - - _ • - -• _ • • _ _ - - t. (2) c nt b. After income eligibility has been determined, an income certification will be signed by you and all household members over 18 yrs old. An income certification letter will be sent by mail after the Housing Director review your file. c. The applicant will then complete a Homebuyer Education Counseling, and will receive a certificate of completion from the work shop provider. The homebuyer certificate must be submitted to the Housing office. d. Once the pre-approved for a loan, a copy of loan approval must be submitted to the Housing office for your file. e. The applicant will then select a home. A real estate agent can assist applipant with selecting a home and will execute a purchase contract. However, a real estate agent is not required. • A Housing Quality Standards Inspection is required on all homes and must past inspection (repairs are completed at sellers expense) before any funding is issued for down payment assistance. • Applicants choosing an existing home built before 1978, must have a termite inspection on the property selected for purchase. lead and asbestos test is required for all properties built before 1978. f. The approved applicant will be given instructions to contact a financial institution of their choice for a full mortgage loan approval. g. The lender will be required to contact the Housing Department to request additional information. 2. Application — Lending Institutions a. Applicant(s) seeking conventional, FHA or VA financing must contact a lending institution of their choice and submit application. Housing & Neighborhood Revitalization Staff shall provide technical assistance. 6 A REVISED JUNE 2019 RR. 20910 pP FOET�III T'f b. A written application signed by the applicant(s), accompanied by the required fees for the appraisal and credit report, etc., including other information required by lender, shall constitute an application. c. The Housing & Neighborhood Revitalization will issue a down payment assistance letter of commitment to applicants to be given to the lender showing the amount of assistance the applicants qualify for. d. The Housing & Neighborhood Revitalization shall respect the decision of the lenders to approve or reject any loan. 3. Loan Approval a. The completed written loan data is reviewed by the lender and the loan is either: i. Approved. ii. Conditionally approved, subject to additional terms; or iii. Rejected. b. Once notification of loan approval is received, applicants are required to provide a loan commitment from the lending institution. The Housing & Neighborhood Revitalization will issue a HOME Agreement, Resale & Recapture Provisions to be signed by the applicants. The HOME Agreement, Resale & Recapture Provisions stipulates that the applicants must remain in the home for a minimal of five (5) years for existing home purchase and a minimal of ten (10) years for new construction, based on the amount of assistance received. In case the property is sold or rented within the period of affordability, the balance of the HOME or CDBG subsidy funds provided is prorated and payable in full to the City of Port Arthur. 4. Preparation for Loan Closing All loans will close at a local Title Company. a. Title Check i. Firm commitment of loan approval is made. ii. Commitment of Title, property survey, and an estimate of yearly tax assessment are ordered from a local title company. iii. The applicants are instructed to provide information regarding his property insurance coverage to the title company. It is required that the City of Port Arthur be named as an additional "Loss Payee" on the insurance policy along with the first mortgage lender for the purpose of securing the interest invested in the property. b. Legal Document Preparation i. The title company forwards the Commitment of Title, survey, tax and insurance information to the lender. ii. The lender reviews the documents and forwards them to an attorney for preparation of the loan documents. iii. The lender's closing instructions, legal documents from the attorney and a down payment assistance check are sent to the title company for loan closing. The City of Port Arthur reserves the right to review the closing documents prior to releasing the down payment assistance funds. iv. The title company reviews the documents, completes the requirements and sets a date for closing. 7 REVISED JUNE 2019 EQUAL N0U5,1, P,R, 20910 ,; OP POR T U N11'r c. Loan Closing The borrowers and sellers sign the legal documents at the title company; the loan proceeds are disbursed and the transaction is completed. The Housing Assistance Staff will provide adequate assistance to the homebuyer through the entire process. It is required that the City of Port Arthur receive a copy of the first mortgage lender's note, deed of trust, the HUD 1 Settlement Statement and final appraisal. PRE-EXISTING ELIGIBLE PROPERTIES Properties must be a single family, owner-occupied residence. All properties participating in the program require inspections by a City Certified Housing Inspector. The properties must meet locally adopted Property Standards, the States most current International Residential and Building Codes, and all other applicable State & Local Codes, including Lead Base Paint Regulations prior to the closing of the loan. Rehabilitation, if any, must be completed prior to the closing of the loan. As part of the inspections process, the City will request a Lead Based Paint and Termite Inspection, provided the potential homebuyer has a full mortgage approval. The applicants must deliver and Seller must sign a Notice to Real Property Owner/Seller. An executed copy of this document must be provided to the City. The applicant(s) will be provided with a Lead Hazard Information pamphlet "Protect Your Family from Lead In Your Home, EPA747-K-99-001". An Environmental Review Report (ERR) must be prepared by the Housing & Neighborhood Revitalization Department. ENVIRONMENTAL CLEARANCE REQUIREMENTS A. The City shall be responsible for providing all information, concerning HOME Investment Partnership and Community Development Block Grant Program funded projects, required for City to meet its responsibilities for environmental review, decision making, and other action which applies to City in accordance with and to the extent specified in 24 CFR, Part 58. In accordance with 24 CFR 58.77(b), the City shall make all reasonable efforts in handling inquiries and complaints from persons and agencies seeking redress in relation to environmental reviews covered by approved certifications. INSPECTIONS The Port Arthur's Housing & Neighborhood Revitalization Department requires all properties to be inspected by a Certified Inspector or a representative or agent appointed by the Housing & Neighborhood Revitalization Department to determine if the properties meet the acceptable criteria according to the Locally Adopted Property Standards, the State's International Residential Codes and all other applicable State & Local Codes. The City of Port Arthur's Housing & Neighborhood Revitalization Department reserves the right to perform its own inspection of any unit prior to settlement. 8 A REVISED JUNE 2019 P,R, 20910 (OVAL HOUSING OPPORTUNITY LAND ACQUISITION AND SITE PREPARATION Land will be provided as available for new construction activities on a case by case basis from the City's Land Bank Program. Additional land may be acquired and cleared of debris, trees, sidewalks, etc., and provided for applicant(s) earning 80 percent or less of the area median income. The cost of land and site Applicant(s) earning between 81 and 120 percent of the area median income can qualify to receive funds for new construction activities in the form of a $5,000/ 10-year/ 0% interest loan to assist with down payment and/or closing costs, as identified in Resolution 02-213; or, the $5,000 may be provided as a grant and may be used to buy lots from the City to construct housing thereon. Funds are provided through utilization of non-federal funds. Recommendations to fund this activity is at the discretion of the City Manager or his/her designees as funds may be available. MINIMUM/MAXIMUM HOME PROGRAM SUBSIDY AMOUNTS The required minimum HOME Investment is $1,000 per unit; the maximum HOME Program per unit subsidy (Section 221(d) (3) (ii) of the National Housing Act) is published and provided annually by the U.S. Department of Housing & Urban Development. The maximum value of a newly constructed unit cannot exceed the maximum allowed under Section 203b of the National Housing Act. The property must appraise for at least 100 percent or more of the sales price. LOAN TERMS Terms should be fixed where payments are affordable, based on the income per household. The City of Port Arthur's Housing Assistance Division reserves the right to deny assistance to those receiving extraordinarily high interest rates (11% and above). Applicants receiving such rates will be recommended for further debt counseling. GIFTS Gifts can be used for down payment and closing cost assistance, if the donor is a family member or a nonprofit organization with lending institutions permission. 4, • . . ! ! • • • • 9 A REVISED JUNE 2019 MOV_ie1. RR. 20910 Ct.UALO PPOR T U P11T'i A . • • • • • • .11. • • •• - • S • negative response CREDIT REPORTS AND CREDIT HISTORY A residential mortgage credit report and credit history will be obtained and reviewed by a third party institution to determine applicant eligibility to qualify for a mortgage loan. CLOSING COST AND/OR PRE-SETTLEMENT COSTS Eligible applicants will receive direct financial assistance for closing costs and/or pre-paid items. This assistance will be provided to the title company or other approved closing agent(s) at the loan closing. No funds will be provided directly to the buyers. MORTGAGE INSTRUMENTS An attorney representing a local title company must draw up all closing papers. Current Fannie Mae/Freddie Mac uniform instruments may be used. The city will provide the soft second documents. TITLE/HAZARD/WINDSTORM/FLOOD INSURANCE Required on all loans. The minimum required amount of coverage must be sufficient to cover all secured debt. APPRAISALS Required on all loans. SURVEYS Required on all loans. HOMEBUYER EDUCATION Borrowers must participate in a homebuyer's education program. Participation in the training program will be documented in the loan file by a copy of the certificate issued by the training agency. 10 REVISED JUNE 2019 P.R. 20910 (OVAL HOUSING OPP OP.T Viii TI' BORROWER'S INCOME The borrower's projected annual gross household income, adjusted for family size can not be greater than 80 percent of the area median income as published by the U.S. Department of Housing and Urban Development (HUD). Staff and lenders must verify all sources of income for two full consecutive years in order to determine adequacy and continuance. All other forms of employment will be reviewed upon a case-by-case basis. Verification of alimony or child support income for qualifying purposes is not restricted to divorce decrees or separation agreements. Other forms of verification are acceptable as long as they verify the amount received, and can demonstrate two years of past history and the continuation of income. CIVIL RIGHTS The Fair Housing Act (42U.S.C. 3601-20) and implementing regulations at 24 CFR part 10; Executive Order 11063, as amended by Executive Order 11063, as amended by Executive Order 12259 (3 CFR, 1958-1963 Comp., 652 and 3CFR, 1980 Comp., p. 307) (Equal Opportunity in Housing and implementing regulations at 24 CFR, Part 107; and title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d) (Nondiscrimination on Federally Assisted Programs) and implementing regulations issued at 24 CFR, Part 1; Executive Order 11063, as amended by Executive Order 12259, and 24 CFR part 107, "Nondiscrimination and Equal Opportunity in Housing under Executive order 11063 or 24 CFR, Part 107 shall be a proper basis for the imposition of sanctions specified in 24 CFR 107.60; The prohibition against discrimination on the basis of age under the Age Discrimination Act of 1975 (42 U.S.C. 6101-07) and implementing regulations t 24 CFR, Part 146, and the prohibitions against discrimination against handicapped individuals under Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing regulations at 24 CFR, Part 8; The requirements of Executive Orders 1246 (3 CFR 1964-65, Comp., p. 339) (Equal Employment Opportunity) and the implementing regulations issued at 41 CFR, Chapter 60. The requirements of Executive Orders 11625 and 12432 (concerning Minority Business Enterprise), and 12138 (concerning Women's Business Enterprise). Consistent with HUD's responsibilities under these Orders, each applicant must make efforts to encourage the use of minority and women's business enterprises in connection with HOME funded activities. Each Contractor must prescribe procedures acceptable to the State to establish activities to ensure the inclusion, to the maximum extent possible, of minorities and women, and entities owned by minorities and women. The Contractor/Subcontractor will be required to identify contracts which have been bid by minority owned, women owned, and/or small disadvantaged businesses. The Age Discrimination Act of 1975 (42 U.S.C., Section 6101 et seq.); Section 504 of the Rehabilitation Act of 1973 (29 U.S.C., Section 794) and "Nondiscrimination Based on Handicap in Federally-Assisted Programs and Activities of the Department of Housing and Urban development", 24 CFR, Part 8. By 11 AREVISED JUNE 2019 [OVAL MOUSING P.R. 20910 OR PORTU LI ITY signing this contract, Contractor understands and agrees that the activities funded herein shall be operated in accordance with 24 CFR, Part 8; and the Architectural Barriers Act of 1968 (42 U.S.C., Section 4151 et. seq.), including the use of a telecommunications device for deaf persons (TDDs) or equally effective communication system. PROGRAM SPECIFIC REQUIREMENTS Recapture Provision Homes acquired with HOME program funds have to satisfy the affordability requirements for a time no less than the applicable period as indicated the table that follows, beginning after a project has been completed. During the affordability period, the following rules related to the buyers investment and the HOME program funds are applicable: • The dwelling acquired with the HOME subsidy will be the principal residence of the participant and will not be rented or used for other purposes. • The participant will not engage the property to obtain a mortgage, gift, sell or exchange the property without the written consent of the Municipality of the City of Port Arthur, Texas. • The Municipality will inspect the property to assure that the participant is in compliance with these requirements during the affordability period of the property. • The non-compliance with the terms and condition mentioned in this provision will obligate the participant to reimburse the total amount of the subsidy to the Municipality. • The affordability period of the property will be as follows: Homeownership Assistance per Unit Affordability Period (Years) Amount up to $30,000 10 Amount of$12,500 5 If the participant sells the property within the affordability periods and net proceeds are sufficient to repay HOME Program Funds invested and homeowner investment, the Municipality will recover the full amount of HOME investment only. The participant will recover any amount for investments and apply the following formula for distribution of surplus net proceeds. Sale during affordability period Recapture amount of Share of net proceeds Down Down Payment & Closing Payment & Closing Costs Costs subsidy funds only Subsidy funds only 1—5 years 100 % 75 % 6— 10 years 50% 50 % If the participant sells the property within any of the affordability periods, but net proceeds are insufficient to repay HOME and homeowner investment, the Municipality will allow the participant to recover its whole investment before recapturing HOME investments. 12 gni REVISED JUNE 2019 P.R. 20910 iV F'P.)f:Tlt11TY Other requirements shall apply: • The participants will pay up to $5,000 to cover the cost of legal service in case of breaches of any of the terms and condition of this provision. • The participant will allow that the HOME subsidy constitute a second mortgage to their property. • Specific documentation required to calculate HOME and net proceeds. o Housing Unit Sale Price (Settlement Statement) o Homeowner Investments — evidence of down payment, closing costs, payments to principal, and any other capital investment to improve the housing unit (original Settlement statement and Capital Expenditures Receipts. o Once the documentation is presented, the Municipality will determine the amount of the recapture on a case-by-case basis. In addition to the recapture restrictions to be incorporated in the deed of sale and promissory note, other provisions will be established to guarantee that the units remain affordable for subsequent homebuyers. These provisions include the following considerations: • A provision restricting refinancing and subsequent mortgages of the property, without the written consent of the Municipality. Refinancing will be limited to capital improvements without equity return. This restriction is necessary, as refinancing with cash return will have the effect of reducing the profit at resale thus violating the purpose of resale / recapture provisions. In addition, a higher monthly payment after refinancing could represent a risk of foreclosure due to income adjustments. • A requirement that the property will be used as the principal residence of the homebuyer(s) will not be leased, converted, sold, donated, and permuted to other such use without written consent of the Municipality. The indebtedness evidence by the Note, and any other financial obligation which may hereafter be imposed on borrower by the Lender, is subordinate to the indebtedness evidence by a note payable to a senior lender ("Senior Lien Holder"), which note is secured by a first deed of trust (the "First Deed of Trust") dated of even date therewith encumbering certain real property located in Port Arthur, Texas (the "Property"). In the implementation of the Homeownership Program, the Department will comply and will require recipients to comply with the provisions of 24 CFR 92.217, Income targeting Homeownership and 24 CFR 92.254, Qualifications as affordable housing. Summary The goals of our programs are to provide decent, safe and sanitary and affordable housing and provide homeownership opportunities for low to moderate-income families and individuals. Providing false or misleading information during the application process will be automatic grounds for dis-qualification to participate in the Housing Assistance Programs. 13REVISED JUNE 2019 ,A P,R, 20910 GRIEVANCE PROCEDURE City of Port Arthur Housing Assistance Programs Should any applicant or participant of services from the Housing Assistance Division wish to file a grievance against the City of Port Arthur pertaining to services received or applied for, they may do so by the following procedure: 1) The person(s) filing the grievance may either verbally or in writing request an appointment with the Housing Programs Administrator Housing & Neighborhood Revitalization Manager to present the complaint. At this informal stage of the resolution process, the complaint may be presented either in written form or verbally. It is the Division's intent to respond to and resolve the complaint as practically & quickly as possible. A response to the complaint should be made no later than 10 working days from the date of receipt. 2) Should the response by the Housing Programs Administrator Housing & Neighborhood Revitalization Manager not be satisfactory to the person(s) bringing the complaint, an appeal may be made directly to the Director of Housing & Neighborhood Revitalization Development Services. At this stage of the resolution process, the request for appeal and the complaint itself should be submitted in writing. The complaint should fully describe the nature of the problem and contain all pertinent information that may aid in understanding the scope of the problem. The Director of Housing & Development Services has option of meeting with the person(s) involved before reaching a decision. A response to the complaint should be made as expeditiously as practical, but no later than 10 working days from the date of receipt of all written information provided or requested. 3) Should the response by the Director of - e . '-- L -'- - e e • __e - .' _ _ •e- Development Services not be satisfactory to the person(s) bringing the complaint, an appeal may be made directly to the City Manager requesting review of the decision. The request for appeal and review should be in writing. A response to the complaint should be made within twenty (20) working days from receipt of the request for appeal to the City Manager. The following list identifies the names, addresses, and telephone numbers of the persons to contact to file a grievance: Beverly A. Freeman Ronald Burton Rebecca Underhill, Housing & Neighborhood Director of Development Services Interim City Manager Revitalization Manager Assistant City Manager 4th Floor, Room 410 2hd Floor, Annex Room 203 3rd Floor, Room 337 444 4th Street 444 4th Street 444 4th Street Port Arthur, TX 77640 Port Arthur, TX 77640 Port Arthur, TX 77640 (409) 983-8101 (409) 983-8259 (409)983-8135 I (We), the undersigned, have read and understand the grievance procedure described above which is to be used for the purpose of resolving any complaint relating to the Housing Assistance Programs of the City of Port Arthur. Applicant Date Co-Applicant Date 14 REVISED JUNE 2019 (OVAL HOUSING cUslG P.R. 20910 OP POET VTII TV City of Port Arthur Housing & Neighborhood Revitalization Department REFUND POLICY Homebuyer Fees: $1,000 Housing Deposit (earnest money) — New Construction- Only if the City of Port Arthur is constructing the home. Existing Home Purchase— Please bring a copy of earnest money receipt after earnest money have been submitted to the title company. 4 If a homebuyer cannot get an approval for a mortgage loan by a lending institution, the homebuyer will receive a full refund of his or her housing deposit. 4 If the homebuyer get an approval for a mortgage loan by a lending institution and the homebuyer changes his or her mind, the homebuyer will receive a refund of 90% of the housing deposit. 4 If homebuyer is rejected for loan or assistance due to falsification of information on his or her application and has paid a housing deposit, the homebuyer will receive a refund of 90% of the housing deposit. 4 Once the homebuyer signs an earnest money contract he or she will receive a 50% refund of the housing deposit. The housing deposit is recorded as earnest money when recorded at Title Company along with earnest money contract. This refund policy does not cover any fees paid directly to lending institutions. Normally, fees to lending institutions are nonrefundable. Enhancement and Upgrade Escrow Funds: Funds placed in escrow for enhancements and / or upgrades are nonrefundable once construction has begun. If homebuyer changes mind prior to initiation of construction, homebuyer will receive all but $100.00 of escrowed funds. I have read, understand and accept the above terms: Agreed To By: Applicant Date Co-Applicant Date 15 gni REVISED JUNE 2019 P.R. 20910 ..r ror.nr]iry ACKNOWLEDGEMENT: All homeowners, potential homebuyers and/or tenants should receive a copy of the City Of Port Arthur's Housing & Neighborhood Revitalization Programs Guidelines for the Homebuyers Assistance Program and/or the Owner Occupied Housing Assistance Rehabilitation and Reconstruction Program, which contain information regarding the program rules and Federal Regulations in accordance with 24 Code of Federal Regulations Part 92 and 570. I and acknowledge (Print Your Name) (Print Your Name) I have received, read and understand the City of Port Arthur's Homebuyers Assistance New Construction and Existing Home Purchase Program Guidelines and/or the Owner Occupied Housing Assistance Rehabilitation and Reconstruction Program Guidelines. Applicant Co-Applicant Date 16 REVISED JUNE 2019 P.R, 20910 fIP PO F.T1,11T'i DEFINITIONS Affordability: affordability refers to the requirements of the HOME Program that relate to the cost of housing both at initial occupancy and over established timeframes, as prescribed in the HOME regulations. Affordability requirements vary depending on the nature of the HOME- assisted activity (i.e., applicantship or rental housing). Age of housing: the number of year-round housing units, as further defined in section 102(a)(11) of the Act. Affordable Housing: housing for which the occupant is paying no more than 30 percent of his or her income for gross housing costs, including utilities. Affordability period: dictated by the amount of HOME funds committed to each HOME- assisted unit and the type of housing activity funded. Federal Final Rule Section 92.254 (a) (4) addresses the period of affordability for homeownership. Annual Income: The HOME Program allows the use of one of three definitions of annual income: Section 8 annual income; annual income as reported on the U.S. Census long form; and adjusted gross income as defined for reporting on IRS Form 1040. Affordability: the requirements of the HOME Program that relate to the cost of housing both at initial occupancy and over established timeframes, as prescribed in the HOME Final Rule. Affordability requirements vary depending upon the nature of the HOME assisted activity (i.e., applicantship or rental housing). Annual Income: the HOME Program allows the use of three income definitions for the purpose of determining applicant eligibility: 1. annual income as defined in 24 CFR 5.609; or 2. annual income as reported under the Census Long Form for the most recent decennial census; or 3. adjusted gross income as defined for purposes of reporting under Internal Revenue Service (IRS) Form 1040 series for individual Federal annual income tax purposes. The definitions are collectively referred to as annual income and are also used in the Community Development Block Grant (CDBG) Program. Appraisal Fee: a fee charged by an appraiser to estimate the market value of a property. Appraised Value: an estimation of the current market value of a property. Appraiser: a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate. Applicant: a person or a family that has applied for housing assistance. [24 CFR 5.403] 17 REVISED JUNE 2019 P.R. 20910 COUAL HOUSING OPPORTUNITY Application: a written request for occupancy in a subsidized housing unit that includes the information required to determine eligibility for assistance and suitability for tenancy. Owners generally develop a standardized form that is completed by the prospective applicant. The application must be signed and dated by the applicant and include the applicant's certification that the information provided is complete and accurate. Assets: the total resources of a person or business, as cash, notes and accounts receivable, securities, goodwill, or real estate (opposed to liabilities). Borrower: a person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms. Building Code: based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building. Closing: the final step in property purchase where the title is transferred from the seller to the buyer. Closing occurs at a meeting between the buyer, seller, settlement agent, and other agents. At the closing the seller receives payment for the property. Also known as settlement. Closing Costs: fees for final property transfer not included in the price of the property. Typical closing costs include charges for the mortgage loan such as origination fees, discount points, appraisal fee, survey, title insurance, legal fees, real estate professional fees, prepayment of taxes and insurance, and real estate transfer taxes. A common estimate of a Buyer's closing costs is 2 to 4 percent of the purchase price of the home. A common estimate for Seller's closing costs is 3 to 9 percent. Certification: shall have the meaning provided in section 104(21) of the Cranston-Gonzalez National Affordable Housing Act, as amended, 42 U.S.C. 12704. Checklist: form developed by HUD for use by landholding agencies to report the information to be used by HUD in making determinations of suitability. Contractors: a contractor is an entity paid with CDBG funds in return for a specific service (e.g., construction). Contractors must be selected through a competitive procurement process. Credit: an agreement that a person will borrow money and repay it to the lender over time. Credit Report: a report generated by the credit bureau that contains the borrower's credit history for the past seven years. Lenders use this information to determine if a loan will be granted. Credit Score: a score calculated by using a person's credit report to determine the likelihood of a loan being repaid on time. Scores range from about 360 - 840: a lower score meaning a person is a higher risk, while a higher score means that there is less risk. 18 REVISED JUNE 2019 P.R. 20910 (DUAL HOUSING OPPORTUNITY Documentation: source documents, such as wage statements, interest statements, unemployment compensation statements, etc., must be reviewed to determine annual (gross) income. Eligibility is based on anticipated income during the next 12 months. Down Payment: the portion of a home's purchase price that is paid in cash and is not part of the mortgage loan. This amount varies based on the loan type, but is determined by taking the difference of the sale price and the actual mortgage loan amount. Mortgage insurance is required when a down payment less than 20 percent is made. Document Recording: after closing on a loan, certain documents are filed and made public record. Discharges for the prior mortgage holder are filed first. Then the deed is filed with the new owner's and mortgage company's names Earnest Money (Deposit): money put down by a potential buyer to show that they are serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal. During the contingency period the money may be returned to the buyer if the contingencies are not met to the buyer's satisfaction. Fair Housing Act: title VIII of the Civil Rights Act, 42 U.S.C. 3601. The Fair Housing Act is a broad statute that prohibits discrimination based upon race, color, religion, sex, national origin, disability, or familial status in most housing and housing-related transactions. Family: a household composed of two or more related persons. The term family also includes one or more eligible persons living with another person or persons who are determined to be important to their care or well being, and the surviving member or members of any family described in this definition who were living in a unit assisted under the program with the person with AIDS at the time of his or her death. Federal Financial Assistance: any assistance provided or otherwise made available by the Department through any grant, loan, contract, or any other arrangement, in the form of: 1. Funds; 2. Services of Federal personnel; or 3. Real or personal property or any interest in or use of such property, including: a. Transfers or leases of the property for less than fair market value or for reduced consideration; and b. Proceeds from a subsequent transfer or lease of the property if the Federal share of its fair market value is not returned to the Federal Government. First-come, first-served: means applicants are served on a first-come, first-served basis. To ensure fairness, the date and time they applied should be stamped on their application by the person receiving the application. Full-Time Student: means a person who is attending school or vocational training on a full- time basis. 19R _ REVISED JUNE 2019 '� AR. 20910 Grant: an award of financial assistance, the principal purpose of which is to transfer a thing of value from a federal agency to a recipient to carry out a public purpose of support or stimulation authorized by a law of the United States (see 31 U.S.C. 6101(3)). A grant is distinguished from a contract, which is used to acquire property or services for the federal government's direct benefit or use. Gross Income: money earned before taxes and other deductions. Sometimes it may include income from self-employment, rental property, alimony, child support, public assistance payments, and retirement benefits. Hazard Insurance: protection against a specific loss, such as fire, wind etc., over a period of time that is secured by the payment of a regularly scheduled premium. Home Inspection: an examination of the structure and mechanical systems to determine a home's quality, soundness and safety; makes the potential homebuyer aware of any repairs that may be needed. The homebuyer generally pays inspection fees. Homeowner's Insurance: an insurance policy, also called hazard insurance, that combines protection against damage to a dwelling and its contents including fire, storms or other damages with protection against claims of negligence or inappropriate action that result in someone's injury or property damage. Most lenders require homeowners insurance and may escrow the cost. Flood insurance is generally not included in standard policies and must be purchased separately. Homeownership Education Classes: sessions that stress the need to develop a strong credit history and offer information about how to get a mortgage approved, qualify for a loan, choose an affordable home, go through financing and closing processes, and avoid mortgage problems that cause people to lose their homes. Housing Counseling Agency: provides counseling and assistance to individuals on a variety of issues, including loan default, fair housing, and home buying. Household: one or more persons occupying a housing unit. HUD1 Statement: also known as the "settlement sheet," or "closing statement" it itemizes all closing costs; must be given to the borrower at or before closing. Items that appear on the statement include real estate commissions, loan fees, points, and escrow amounts. Low-Income Family: a family whose annual income does not exceed 80 percent of the area median income, as determined by HUD, with adjustments for smaller and larger families. Low and Moderate Income: low and moderate income (also referred to in this manual as LMI) means family or household with an annual income less than the Section 8 Low Income Limit, generally 80 percent of the area median income, as established by HUD. 20 REVISED JUNE 2019 P,R, 20910 tIG'P.?FT1.111T1' Income Household/Family: a household/family having an income equal to or less than the Section 8 Very Low Income limit (50% of the area median income) as established by HUD. Moderate-Income Household/Family: a household/family having an income equal to or less than the Section 8 Low Income limit (80% of area median income) established by HUD, but greater than the Section 8 Very Low Income limit (50% of area median income) established by HUD. Interest Rate: the amount of interest charged on a monthly loan payment, expressed as a percentage. International Residential Code (IRC): the International Residential Code is a comprehensive, stand-alone residential code that creates minimum regulations for one- and two-family dwellings of three stories or less. It brings together all building, plumbing, mechanical, fuel gas, energy, and electrical provisions for one- and two-family residences Lender: a person or company that makes loans for real estate purchases. Sometimes referred to as a loan officer or lender. Loan: money borrowed that is usually repaid with interest. Loan Officer: a representative of a lending or mortgage company who is responsible for soliciting homebuyers, qualifying and processing of loans. They may also be called lender, loan representative, account executive or loan rep. Low-and moderate-income household: a household having an income equal to or less than the Section 8 low-income limit established by HUD. Low-and moderate-income person: a member of a family having an income equal to or less than the Section 8 low-income limit established by HUD. Unrelated individuals will be considered as one-person families for this purpose Mortgage: a lien on the property that secures the Promise to repay a loan. A security agreement between the lender and the buyer in which the property is collateral for the loan. The mortgage gives the lender the right to collect payment on the loan and to foreclose if the loan obligations are not met. Note: a legal document obligating a borrower to repay a mortgage loan at a stated interest rate over a specified period of time. Pre-Approval: a lender commits to lend to a potential borrower a fixed loan amount based on a completed loan application, credit reports, debt, savings and has been reviewed by an underwriter. The commitment remains as long as the borrower still meets the qualification 1 gEl REVISED JUNE 2019 P.R, 20910 Oi'i 6f.T V1IT'i requirements at the time of purchase. This does not guaranty a loan until the property has passed inspections underwriting guidelines. Principal Residence: refers to the main home where a person lives. Property Standards: means as with all HOME-assisted properties, properties that are constructed with HOME funds must meet certain standards. (For full information on standards for all HOME-assisted properties, see Exhibit 2-1 in Chapter 2: General Program Rules.) Property Tax: a tax charged by local government and used to fund municipal services such as schools, police, or street maintenance. The amount of property tax is determined locally by a formula, usually based on a percent per $1,000 of assessed value of the property Real Estate Agent: an individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker. Recapture provision: outlines the terms of recapture of PHA subsidy to the purchaser. The PHA may choose to recapture the entire amount of direct financing to the purchaser (generally in the form of a subordinate mortgage) or to forgive the loan over time. Survey: a property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc. Surveys are conducted by licensed surveyors and are normally required by the lender in order to confirm that the property boundaries and features such as buildings, and easements are correctly described in the legal description of the property. Title Company: a company that specializes in examining and insuring titles to real estate. U.S. Department of Housing and Urban Development (HUD): the Federal agency responsible for national policy and programs that address America's housing needs that improve and develop the Nation's communities, and enforce fair housing laws. HUD's business is helping create a decent home and suitable living environment for all Americans, and it has given America's cities a strong national voice at the Cabinet level. Very-Low-Income Families: families whose annual incomes do not exceed 50 percent of the median income for the area (adjusted for family size). �? REVISED JUNE 2019 PER. 20910 COUAL MOUSING 0PPOF TUNITV